Leading pension funds agree on importance of securities litigation monitoring
Panel of industry experts review fiduciary duty to actively track global securities litigation for institutional investors
A panel comprised of past and present legal representatives from several leading U.S. pension funds, during a webinar hosted by Financial Recovery Technologies, LLC (FRT), emphasized that institutions have a strong fiduciary duty to actively track securities litigation, in the U.S. and across the globe. The expert panelists shared their funds’ experiences in being active participants in securities litigation. The discussion also addressed how funds should assess damages in order to make informed decisions about becoming active, what funds should consider before becoming active, and what impact being an active participant may have on an institution.
Securities litigation and resulting class actions represent both challenges and potential opportunities for institutional investors. While recovering damages caused by corporate financial malfeasance is beneficial to a fund, becoming actively involved in securities litigation can be a daunting experience.
Litigation monitoring involves tracking newly filed fraud complaints, assessing the potential impact on the fund and its investments, and deciding whether or not to take action. Increasingly, institutions are not only looking at securities litigation in the context of fiduciary duty, but seek a deeper understanding of their own recoverable damages in affected securities, in order to make wiser decisions about if and when to seek lead plaintiff status, or whether to opt out of the class to pursue a private action. Funds that take a proactive role in the litigation process can have a large impact on their assets and the investment community as a whole.
As discussed by the panelists, pension funds have several options for monitoring securities class litigation, including utilizing internal sources, relying on outside counsel who may not have the fund’s best interest in mind, or outsourcing to an impartial third party service.
“Monitoring securities litigation and evaluating whether or not to become an active participant is a standard of fiduciary responsibility for institutional investors,” said Kim Johnson, who served for more than a decade as General Counsel to the Louisiana and Colorado state pension funds. “Today’s discussion really highlighted how the use of unbiased and consistent evaluation can aid in meeting this standard.”
U.S. CLAIMS I GLOBAL GROUP LITIGATION I ANTITRUST I LITIGATION MONITORING I BUYOUTS
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